Government seeks to cut SBI stake to 51% from 55%

March 08, 2010

Finance minister Pranab Mukherjee has moved the SBI

(Amendment) Bill, 2010, in the Lok Sabha that seeks

to cut the government's stake in the Bank to 51% from 55%

A Bill, seeking to reduce the Indian government's shareholding
in the State Bank of India (SBI) to 51% from 55% now and to
allow the Bank to raise more capital from the market through
preference shares, was introduced in the Lok Sabha on Monday, reports PTI.

Finance minister Pranab Mukherjee moved the State Bank of India
(Amendment) Bill, 2010, amidst slogan shouting by Samajwadi Party
(SP), Rashtriya Janata Dal (RJD) and Bahujan Samaj Party (BSP)
members against the Women's Reservation Bill in its present form.

The Bill's statement of objects and reasons said that the 

legislation was aimed at allowing 'reduction of shareholding

of the Central government to 51% from 55% consisting of 

the equity shares of the issued capital'.

It said that the SBI Act, 1955, was amended in 1993 to
enable the Bank to access the capital market.

"While SBI can access the capital market by issuing
equity shares or bonds, or by both equity shares and bonds,
there is no express provision under the SBI Act to enable the
bank to issue preference shares and also bonus shares," the Bill added.

"The amendment Bill seeks to provide for enhancement
of the capital of (the) State Bank (of India) by issue of
preference shares, to enable it to raise resources from the
market by public issue or preferential allotment or private placement," it said.

"The Bill also aims to provide for flexibility in the
management of the Bank," it added.

The Bill will provide for increasing the authorised capital
of SBI to Rs5,000 crore and enable the Union government
to increase or reduce the authorised capital in consultation
with the Reserve Bank of India.